Title search during purchase

[smlynarczyk]

In looking at the AOPA website, there is a recommendation for various searches. The one that caught my eye was the title search. This costs $75 which is a drop in the bucket, however, wondering how this might fit in the buying process;  i.e., should clear title be listed as a condition to be met in the purchase agreement?  Seems like possibly a good thing to do. Comments anyone?

 

[Andy95W]

Yes, a clear title should be a condition for the sale.  A reputable seller should readily agree to this provision.

[Bob_Belville]

I think the buyer typically gets the title search done before the "closing". It is advisable to do it as soon as you can since there well might be an old lien that needs to be removed. Sometimes a bank merger makes it difficult to get that done quickly. (I was contacted a couple of years ago by the owner of my first M20E who was now selling it. He had bought it from the guy I sold it to. The new buyer's title search showed the original lien from 1977 which I paid off in 1982. The plane changed hands twice after that. I think it took a month or more and I had to intervene more than once through the City Exec of Bank of America to get them a release and BoA had been the original lender, under a different name NCNB or... I can see that an old loan from a bank that's no longer around could take time to get cleared. All that might complicate things, particularly if you're going to have the purchase financed.

[smlynarczyk]

Thanks guys for the input. As I have narrowed down my list of Mooney possibilities, the whole sales thing/registration/legal stuff is now coming to the foreground.

[Guest]

Title search and escrow service shared by both parties, protects both parties.

Clarence

[Danb]

Agreed re. title search, when Insold my 1988J, a search was done and depicted an item leined against my plane which was bogus, it was a pain to get a fraudulent item removed. Next time I sell a plane I'm doing a search on my own plane based on the inconvenience I encountered selling my J.

[Bob - S50]

1 hour ago, Bob_Belville said:

I think the buyer typically gets the title search done before the "closing". It is advisable to do it as soon as you can since there well might be an old lien that needs to be removed. Sometimes a bank merger makes it difficult to get that done quickly. (I was contacted a couple of years ago by the owner of my first M20E who was now selling it. He had bought it from the guy I sold it to. The new buyer's title search showed the original lien from 1977 which I paid off in 1982. The plane changed hands twice after that. I think it took a month or more and I had to intervene more than once through the City Exec of Bank of America to get them a release and BoA had been the original lender, under a different name NCNB or... I can see that an old loan from a bank that's no longer around could take time to get cleared. All that might complicate things, particularly if you're going to have the purchase financed.

That is essential what happened to us too.  Title search showed a lien from a no longer in business bank when the original owner bought the plane.  We had to find out who bought that bank, contact them, and get them to send us a release from the lien.  What a PITA.  Worth the effort though.

[carusoam]

Clear title is incredibly important.  

You are about to pay a plane load of AMU for something that 'official' paperwork held in a far away place says belongs to somebody you don't know, or a bank that no longer exists...

When the plane costs as much as your house, you wouldn't want that to happen.  Back in the day, Mitsubishi was financing a lot of Mooney purchases and plenty of the paperwork got lost.  Decades of bank take-over after corporate bank take-over after government re-organizing.... Since then, Everything has been computerized and searchable by the internet.

Getting it straight is a pain, not having it straight can be worse.

Buying a plane is similar to buying a house.  They are both old, expensive, and have decades of history....  PPI and title search are important to the buyer.

 In NJ, a home purchase needs a lawyer.  For a plane, you can hand your life-savings to a guy that says he owns the plane...  title search and title insurance are available for houses...

Best regards,

-a-

[cliffy]

I was going to suggest a $15 book "How to Buy Used Aircraft Without Taking a Dive" BUT I just looked on 

Amazon- YIKEES!    The price is in the gold standard arena not even for used. I'll hang onto mine!

https://www.amazon.com/Used-Aircraft-Without-Taking-Dive/dp/B000NNB1CA/ref=sr_1_fkmr0_1?s=books&ie=UTF8&qid=1478550035&sr=1-1-fkmr0&keywords=how+to+buy+a+plane+without+taking+a+dive

[Two Oh One]

I can't seem to link directly to the FAA web page, but this link takes you to a Google search, and the top hit goes to the FAA page for title searches. 

The $10 CD-ROM option sure beats $75.  In addition to the obvious title issues, you also get to see the entire ownership history of the plane you're considering.  

Might be eye opening to see where your "always hangared in dry climate" prospect has really been..

EDIT: Link appears to be working now

Edited November 9, 2016 by Two Oh One
Link update

[peevee]

I have been using aerospace reports for escrow and title. I've been happy with them, less than a hundred dollars is nothing in the grand scheme of things. 

Edited November 9, 2016 by peevee

[midlifeflyer]

43 minutes ago, Two Oh One said:

I can't seem to link directly to the FAA web page, but this link takes you to a Google search, and the top hit goes to the FAA page for title searches. 

The $10 CD-ROM option sure beats $75.  In addition to the obvious title issues, you also get to see the entire ownership history of the plane you're considering.  

There's a catch to using the CD. Two of them actually. 

First, we're talking about the rough equivalent of a real estate purchase. There is a title history that, depending on the age of the airplane, can go back 20, 30, 40, 50, more? years. Like the records in you local registry of deeds, the records will go back to the very first time title passed from the manufacturer to the first purchaser and include every transfer, which includes every lien that was placed on the airplane and every document that removed that lien.

If you understand the legal documents you are reading enough to tie every security agreement or lien document to to discharge document,and to recognize whether someone along the way transferred title to someone else, great. You've substantially reduced the risk of someone else  having more rights to the airplane than you. Or maybe you don't care about that risk. OTOH, you might figure a professional looking at the record is worth a couple of extra bucks.

The second? Less likely unless your seller is a crook but, the title you get is only as good as the last record formally in the FAA Registry when it was burned. There may be others in the queue, recorded but not yet entered in the the records for that specific aircraft. The title people are typically in Oklahoma City and can get a much more current view.

[Two Oh One]

I wouldn't really disagree with either of the points above, but I still like the CDs.  

As to the first (a title search can be complex and you'd better pay attention to detail), I agree but I also think there's a lot of knowledge to be gleaned by a meticulous personal review.  The Title Co guy or lawyer says "Yep it's clear."  My eyes say "There were several mechanic's liens back with the second owner, and some possible issues in the logbooks during the same period. Apparently maintenance was a sore point for him. Maybe this plane is a 'pass'..." Or as I mentioned earlier, some other interesting historical facts can be seen by digging in on your own.

Now if you're not comfortable doing this, $75 bucks or whatever is very reasonable for some professional help.

The second (real time info may not make the CD) is technically true, but I think an assessment of that risk could be made on a case-by-case basis.  The FAA is typically a couple of weeks behind in processing registration documents.  For another $10 they'll "certify true and complete" the records they send you.  I'm not a lawyer, so I guess I can't say what exactly that means...

Good discussion to be sure.

[drapo]

When I bought my 65 M20E from a gentleman in Upstate New York, I used the AOPA typical contract that mentioned that the airplane was sold free of lien, even though the seller mentioned it in his ad. After my offer was accepted, I did a lien search as part of the importation process and there was a 1970 lien on the airplane that wasn't cleared and that my seller didn't know about because every owner since then bought the aircraft without financing.

It took 4 months and a lot of research on the part of the previous owner and myself to get that lien cleared and I was finally able to fly my E.

Mention it in your contract and get the lien cleared, it is money well spent...

[highlowfastslow]

On 11/6/2016 at 6:40 AM, smlynarczyk said:

In looking at the AOPA website, there is a recommendation for various searches. The one that caught my eye was the title search. This costs $75 which is a drop in the bucket, however, wondering how this might fit in the buying process;  i.e., should clear title be listed as a condition to be met in the purchase agreement?  Seems like possibly a good thing to do. Comments anyone?

 

I just bought a Mooney, a '65E so it's way down on the AMU scale. I just used the AeroSpace reports off of AOPA, which i'm guessing is what you referenced in your first post. Link here: https://aerospacereports.com/services/aircraft-title-search-75

. As soon as you have an accepted offer, do this. To N1395W's point, a clear title should be in any purchase contract so don't be afraid of putting some money down before running the title search. I'd do it before the pre-buy too so you can get all the info possible ahead of the pre-buy. 

I didn't feel the need to use any escrow services. If i was buying something new or >$100K i probably would though

[carusoam]

They call that earnest money...

sort of a small payment that outlines what you want to do to complete the purchase.

things that come to mind...  PA, PPI, finance, insurance, TT....

 

That document is often called the purchase agreement. Include every step and a timeline of events.  Include things like you want the plane to be off the market or at least not sold to somebody else while you complete the purchase.

You don't want to be in the middle of a 2AMU PPI when the owner says, 'sorry, I just sold it to the other guy for more money...'

The earnest money protects your interests while you are spending on things related to the sale.  Don't drag your feet completing the sale.  Feet dragging would be unfair to the seller.  Sellers can be ordinary people too...

It would be fair for the seller to continue to post and advertise in the event that the sale falls through.  Usually, the seller posts the status, like 'sale pending'....

PP thoughts only, I am not a lawyer...

Best regards,

-a-